New law on restrictive covenants

Published 24 March 2016 by Homble Olsby advokatfirma as

Mirroring developments in Denmark (for further details please see "Bill on restrictive employment covenants resubmitted"), in December 2015 the Norwegian Parliament adopted new rules on restrictive covenants in the labour market. The bill entered into force on January 1 2016. The rules are included in the Working Environment Act and represent major amendments. The new legislation has several similarities with the Danish rules.

The new rules include restrictions on clauses governing non-compete and non-solicitation clauses (for further details please see "Bill proposes restrictions on non-compete and non-soliticitation clauses"). The new rules are designed to:


  • enhance mobility in the labour market;
  • promote competition and innovation; and
  • increase overall employment.

Generally, they apply to all employees. However, the managing director of a company may be exempt from the provisions, provided that before resigning, he or she renounces his or her stated rights in writing in return for severance pay.

Employers may still protect their business secrets and know-how through non-compete and nonsolicitation clauses, subject to certain restrictive conditions. A non-compete clause can be enforced only if the employer has a special need for protection. According to the preparatory works, this requirement generally will not be fulfilled if an employee has been working for the employer for less than six months. The non-compete clause may not apply for longer than 12 months following termination of the employment relationship and the employee is entitled to compensation throughout the entire period. The compensation shall correspond to 100% of the employee's salary up to 8G (G is the National Insurance base amount, currently Nkr720,544) and at least 70% of the employee's salary exceeding 8G. The compensation can be limited to 12G.

Similarly, non-solicitation clauses can apply for only 12 months and cover only customers with which the employee has been in contact or for which he or she has been responsible during the 12 months before enforcement of the clause. There are no compensation requirements in respect of non-solicitation clauses.

The new provisions also prohibit agreements on the non-solicitation of employees between two or more undertakings. There are, however, some exemptions relating to business transfers.

The new rules apply to all agreements entered into after the implementation of the act and all agreements that exist as of 12 months after implementation (ie, from January 1 2017). Thus, employers must review their employment contracts in order to evaluate whether amendments are necessary.

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Ole Kristian Olsby / 17.02.16